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on Cognitive and Behavioural Economics |
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Issue of 2022‒09‒12
eight papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Benjamin Enke; Thomas Graeber; Ryan Oprea |
| Abstract: | The influence of behavioral biases on aggregate outcomes like prices and allocations depends in part on self-selection: whether rational people opt more strongly into aggregate interactions than biased individuals. We conduct a series of betting market, auction and committee experiments using 15 classic cognitive bias tasks. We document that some cognitive errors are strongly reduced through self-selection, while others are not affected at all. A large part of this variation is explained by the quality of people's meta-cognition. In some cognitive tasks, confidence and performance are strongly positively correlated, while for others this link is absent or even negative. |
| JEL: | D01 D03 |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30262&r= |
| By: | Lambrecht, Marco (Hanken School of Economics); Proto, Eugenio (University of Glasgow); Rustichini, Aldo (University of Minnesota); Sofianos, Andis (Heidelberg University) |
| Abstract: | We investigate in a laboratory setting whether revealing information on the intelligence of both players affects behavior in repeated games. We study the Prisoners' Dilemma (PD) and Battle of Sexes (BoS) as they cover a large set of the interesting scenarios generated by repeated games of two actions two players symmetric stage games. Furthermore, in order to understand how cognitive skills disclosure interacts with different potential payoff allocations, we consider two versions of the BoS, with high and low payoff inequality. In PD, disclosure markedly hampers cooperation, as higher intelligence players trust their partners less when made aware that they play against someone of lower ability than themselves. Similarly, in BoS with low payoff inequality, disclosure disrupts coordination, as higher intelligence players try to force their most preferred outcome. However, in the BoS with high payoff inequality, this pattern of behavior changes substantially. Disclosure does not significantly affect coordination, while coordination is more often on outcomes that favor the less intelligent player. This result may indicate an intention to achieve a fairer division, or that the intelligent player anticipates that the other player will not concede. |
| Keywords: | repeated prisoners dilemma, cooperation, intelligence, IQ |
| JEL: | C73 C91 C92 D83 |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15438&r= |
| By: | Anujit Chakraborty; Chad W. Kendall |
| Abstract: | Rational agents must perform backwards induction by thinking contingently about future states and actions, but failures of backwards induction and contingent reasoning are ubiquitous. How do boundedly-rational agents make decisions when they fail to correctly forecast actions in the future? We construct an individual decision-making experiment to collect a rich dataset in which subjects must reason only about their own future actions. We demonstrate substantial mistakes relative to the rational benchmark, and use the rich dataset to estimate several possible models of boundedly-rational foresight. We find that a model in which subjects expect to make more mistakes when the payoff consequences of their future actions are more similar best explains behavior. |
| JEL: | D03 D90 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30333&r= |
| By: | Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Kataria, Mitesh (Department of Economics, School of Business, Economics and Law, Göteborg University); Lampi, Elina (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | Using an online experiment, we investigate the influence of sexual objectification in media on economic decision making. In the experiment, subjects are asked to evaluate advertisements in women’s magazines. In the treatment groups, the ads portray women in sexually objectifying poses, while the poses are neutral in the control group. The main research hypothesis is that sexual objectification tends to make women self-objectify, i.e., they internalize the view of the objectifying images, and as a result, they lower their reservation wage. We find that women in the treatment groups do self-objectify: Women who were exposed to the objectifying images described themselves with words related to body shape or size significantly more often than women in the control group. Adding a warning text about the fact that photoshopped images can create unrealistic body ideals did not mitigate the self-objectification. However, we do not find any effect of the sexual objectification on women’s reservation wages. If we take the results at face value, they do suggest that the objectification of women in media, while having important psychological and emotional effects, does not seem to affect women’s economic behavior, at least not directly. |
| Keywords: | online experiment; sexual objectification; media; economic decision making |
| JEL: | C91 J16 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0824&r= |
| By: | Thomas Buser (University of Amsterdam); Roel van Veldhuizen (Lund University); Yang Zhong (University of Amsterdam) |
| Abstract: | Many professional and educational settings require individuals to be willing and able to perform under time pressure. We use a lab experiment to elicit preferences for working under time pressure in an incentivized way by eliciting the minimum additional payment participants require to complete a cognitive task under various levels of time pressure versus completing it without pressure. We make three main contributions. First, we document that participants are averse to working under time pressure on aggregate. Second, we show that there is substantial heterogeneity in the degree of time pressure aversion across individuals and that these individual preferences can be partially captured by simple survey questions. Third, we include these questions in a survey of bachelor students and show that time pressure preferences correlate with future career plans. Our results indicate that individual differences in time pressure aversion could be an influential factor in determining labor market outcomes. |
| JEL: | J24 D9 C91 |
| Date: | 2022–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20220054&r= |
| By: | Braganza, Oliver |
| Abstract: | Modern societies, almost unequivocally, pursue the goal of economic growth. The central normative reason for this has recently been called the 'consumerist claim', namely the standard economic claim that increases in consumption (i.e. growth), by and large entail welfare increases. However, the consumerist claim does not take account of behavioral economics. Specifically, it disregards that consumption increases can also be achieved by nudging, as practiced e.g. in marketing or advertising. Remarkably, proponents of the consumerist claim are often vocal critics of governmental nudging, which is decried as manipulative and paternalistic, but are simultaneously dismissive or apologetic about market-derived nudging. Here we argue, that in light of behavioral economics Adam Smiths 'invisible hand' will often produce outcomes as if it belonged to an 'invisible paternalist', who systematically and efficiently nudges individuals towards ever increasing consumption. Specifically, we develop the notion of 'market paternalism' (MP), based on a synthesis of behavioral and evolutionary economic reasoning. MP entails three central properties: First, unregulated markets naturally give rise to pervasive nudges, modifying our behavior, preferences and beliefs in ways beyond our conscious awareness and control. Second, these nudges will coalesce towards an emergent system-level end, that cannot be derived from any coherent notion of individual preferences. Third, MP operates in part by a cultural evolutionary mechanism, implying that it will occur with computational and coordinative power far beyond any individual (or government). To assess the potential practical relevance of MP, we survey the literature, finding clear evidence that MP drives or exacerbates numerous pressing societal problems, including rampant obesity, mass surveillance and the climate crisis. It does so by covertly and incessantly nudging not only our behavior, but also our preferences, values and beliefs towards the single goal of increasing consumption. The surprising consequence is that, in light of behavioral economics, unregulated markets should be expected to systematically subvert individual autonomy and rationality, the very values typically invoked to defend the consumerist claim. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifsowp:23&r= |
| By: | Oliver Gürtler (University of Cologne); Lennart Struth (University of Cologne); Max Thon (University of Cologne) |
| Abstract: | In many situations, agents take risks by choosing an action that increases their performance immediately, but that potentially leads to a large loss. The current paper studies how such risk-taking behavior depends on the level of competition that the agents face. We study a tournament model and we find that more intense competition, measured by the number of competitors as well as their relative standing, induces agents to take higher risks. We use a rich panel data set on professional biathlon competitions as well as survey data from professional biathletes to confirm the model predictions. Finally, we discuss managerial implications. |
| Keywords: | Risk-taking, competition, tournament, incentives, biathlon |
| JEL: | M51 M52 Z22 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:181&r= |
| By: | Abel Brodeur, Nikolai M. Cook, Anthony Heyes |
| Abstract: | Amazon Mechanical Turk is a very widely-used tool in business and economics research, but how trustworthy are results from well-published studies that use it? Analyzing the universe of hypotheses tested on the platform and published in leading journals between 2010 and 2020 we find evidence of widespread p-hacking, publication bias and over-reliance on results from plausibly under-powered studies. Even ignoring questions arising from the characteristics and behaviors of study recruits, the conduct of the research community itself erodes substantially the credibility of these studies’ conclusions. The extent of the problems vary across the business, economics, management and marketing research fields (with marketing especially afflicted). The problems are not getting better over time and are much more prevalent than in a comparison set of non-online experiments. We explore correlates of increased credibility. |
| Keywords: | online crowd-sourcing platforms, Amazon Mechanical Turk, p-hacking, publication bias, statistical power, research credibility |
| JEL: | B41 C13 C40 C90 |
| Date: | 2022–08–24 |
| URL: | http://d.repec.org/n?u=RePEc:wlu:lcerpa:am0133&r= |